(Kitco News) - The European energy crisis is deepening, despite governments' attempts at intervention, and this could lead to "social unrest," said Willem Middelkoop, COO and Founder of the Commodity Discovery Fund, which is based in The Netherlands.
"A lot of people are very nervous about the upcoming winter," he said. "You can't choose whether you heat your home or not… there's a huge crisis developing within Europe."
Europe's benchmark natural gas price (TTF) is up 156 percent over the year. Germans are considering heating their homes with firewood and cutting down on their electricity use, as electricity prices have risen 177 percent over the year.
Much of the reason behind the price hikes is due to geopolitics concerning the Ukraine conflict. Russia, which supplies 40 percent of Europe's natural gas, shut off its Nord Stream 1 pipeline in August. Russian President Vladimir Putin confirmed that this was due to European sanctions on his country, as well as payment issues.
"Putin said he's willing to keep supplying oil and gas to Western Europe, but [with] one demand," Willemkoop explained. "[He wanted payment] in rubles, gold, or Bitcoin. And the Western countries said they won't accept that."
Willemkoop spoke with David Lin, Anchor and Producer at Kitco News, at the Precious Metals Summit in Beaver Creek, Colorado.
European Subsidies and Social Unrest
In response to higher energy costs, European governments have proposed a range of measures, from price caps to subsidies. British Prime Minister Liz Truss, for example, has proposed capping electricity bills at 2,500 pounds ($2,700) for two years. As of August, European governments have spent more than $270 billion to shield households and companies from rising energy prices.
Middelkoop labeled such policies "money printing."
"I think we'll see a lot of money printing," he said. "It's a difficult balancing act for governments, but if the pressure becomes too large, and people start to demonstrate and revolt… you could have mass demonstrations, even riots, and governments are afraid of that."
He added that if there is no peace deal between the Ukraine and Russia, that there will be "social unrest" and "rising crime" across Europe.
"You have countries in Europe which are much poorer [than the Netherlands], and this will cause havoc," he said.
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East-West Divisions and Monetary Reset
Tensions between Eastern nations like Russia and China, and Western countries like the U.S. and Germany, will result in a monetary reset, said Middelkoop.
"We're on the path of more conflict, and it's a path of deglobalization," he said. "It's even a path away from the old [monetary] system… [to one] in which we are going to look to hard assets, commodities, and maybe even gold."
The BRICS countries (Brazil, Russia, India, China, and South Africa) have openly discussed conducting trade in a new reserve currency, which would be composed of a basket of currencies and even commodities.
"We could have a move away from our dollar-based system to a system which is introduced by the BRICS countries," Willemkoop suggested. "We see the first indications [of this]. We see trading between the BRICS nations, in which Russia is supplying cheap energy to India and China, and India and China are paying with their own currencies. They're not paying with dollars anymore."
He pointed to Eastern nations being "fed up with the double standards of the West… When the U.S. invaded Iraq [and] Afghanistan, we didn't have sanctions against the U.S. So it's a world of double standards."
To find out how Middelkoop thinks the emerging new world system could benefit commodities, watch the video above.
Follow David Lin on Twitter: @davidlin_TV
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